Over a year ago, Business Insider featured a story about a man who amassed wealth through real estate investment. It wasn’t a news article in the typical sense; it wasn’t about a current event. In fact, the story could have been written at any time over the past century. Its core message—that directing efforts in a consistent, focused manner can yield incredible results—is timeless, yet frequently overlooked.
Focus is pivotal to every successful endeavor, be it a thriving marriage, health and fitness, sports championships, academic achievements, raising well-rounded children, or attaining financial freedom. In essence, anything truly valuable requires undivided attention.
Follow. One. Course. Until. Successful.
A real estate investor, who once had just $1,000 to his name and later achieved financial independence, shares his investing philosophy: ‘You get wealthy by focusing on one asset.’
Kathleen Elkins’ article on Business Insider delves into the journey of Dion McNeeley. McNeeley is convinced that anyone can harness real estate investing to build wealth, irrespective of their financial starting point.
“I reached 40 without ever having $1,000 in the bank,” the 51-year-old property investor shared with Insider. “I didn’t inherit any money, grappled with bad debt, earned a modest income, and raised three children as a single parent. It’s hard to think of more challenging circumstances.”
Two years of meticulous saving saw McNeeley purchasing his first investment property, a duplex in the Tacoma, Washington area in 2013. Two years onward, he acquired his second.
Now, McNeeley boasts ownership of 16 units spread across seven properties in Washington state. Drawing six-figure profits annually from rental income, he considers himself financially self-reliant, a fact Insider validated through scrutinizing McNeeley’s assets.
His investment philosophy, profoundly influenced by Charlie Munger, Warren Buffett’s business confidante, is straightforward. McNeeley emphasized, “He (Munger) believes in wealth accumulation through concentration on a single asset.” And McNeeley’s asset of choice? Real estate. The strategy is simple: first, accumulate wealth, then diversify to safeguard it.
With a net worth nearing $2 million, McNeeley doesn’t deem himself sufficiently affluent to diversify. If he were to diversify prematurely—by locking funds in retirement accounts or dabbling in the unpredictable world of cryptocurrencies and stocks—he’d still be tied to a regular job. Currently, though he is employed full-time at a commercial-truck-driving school, it’s out of passion rather than necessity.
Once his net worth approximates $5 million, McNeeley anticipates delving into alternative investments like cryptocurrencies and stocks. But for the time being, his allegiance lies staunchly with real estate. He lists four compelling reasons:
1. Cash Flow: Real estate offers immediate cash flow, McNeeley expounds. Unlike stocks, which either require selling or substantial investment in dividends to generate significant cash flow, real estate can offer substantial returns with a manageable upfront investment.
2. Appreciation: Investing in real estate magnifies the value of your investment. McNeeley illustrates, “If I invest $100,000 into a $400,000 duplex and it appreciates by 10%, my gain isn’t $10,000 on the $100,000; it’s $40,000 on the $400,000.”
3. Principal Pay-down: With every rent payment, tenants contribute to reducing the mortgage principal. This creates a growing savings account without any additional input.
4. Tax Benefits: Real estate investments offer significant tax benefits. As McNeeley highlights, rental incomes can often be structured in a way to minimize, or even nullify, tax liabilities.
Such is his faith in real estate that McNeeley liquidated his 401(k), previously invested in the stock market, and channeled those funds into another rental property. Although conventional wisdom cautions against early withdrawals from retirement accounts due to penalties, McNeeley leveraged a temporary waiver during the 2020 pandemic, extracting close to $88,000 without penalty.
While McNeeley might express reservations about conventional retirement accounts, he continues to contribute enough annually to his 401(k) to avail of the company match, viewing it as ‘free money.’ However, his overarching sentiment remains: “Why lock funds in a retirement account when they can be invested in a promising rental property?”
With patience and a long-term perspective, McNeeley believes anyone can emulate his success. His advice to budding investors? Educate yourself on real estate investment through reading, podcasts, and connecting with established investors. And most importantly, find an investment that genuinely excites you. For McNeeley, the choice is clear: “If gifted stocks, I’d promptly sell them to invest in real estate.”
Real estate stands out as an unparalleled asset class for wealth and cash flow accumulation. If you’re a hardworking professional without the time or inclination to walk McNeeley’s path, reach out to us. Discover how MultiLiving Solutions can assist you in reaping the rewards of real estate, passively.
